Damn annoying is what it is. And it is actually an ATI (excuse me, AMD) Driver bug.

They seem to have changed something with Driver architecture in the last couple of generations… The dragons are visible from a distance but when the camera moves too close (i.e. you want to talk or fight them) they disappear. Fighting them is not much fun after that. Still I am consoling myself that something like this happened only on the last stage of the game. I had a blast (as usual) up to that point. Oh well…